1. Finding Profitability Through Backgrounding or Finishing

2. Calf Pricing Decision Process Cow Calf Backgrounding Finishing Basis Charts and BeefBasis.com Seasonality

3. Basis Basis = Cash Price - Futures Price If Cash = $120 and Futures = $110 Basis = Estimated basis is a forecast based on history.

4. September Feeder Cattle

5. October Feeder Cattle

6. November Feeder Cattle

7. July Fed Cattle

8. A Marketing Plan A marketing plan should address: –short term survival –long term success –key elements –map to destination

9. Key Elements of a Marketing Plan Marketing objectives Cost of production Current market environment Contingency plans Flexibility

10. Pricing Targets Establish minimum price objective –Risk tolerance –Your cost of production Could use Beef Cow/Calf Enterprise Budget Your records provide better information

11. Strategies for Marketing Spring Calves Wean, Sell Nov. 1 Background, Sell Jan. 1 Background, Finish, Sell July 15 Wean Sep. 1, Finish, Sell June 1 Wean Nov. 1, Finish, Sell July 1

12. Wean & Sell Nov. 1 Calves weaned & sold on Nov 1 (550#) Benchmark strategy Cost of Production—Cow costs Market Value Factors –Pre-conditioning –Source verification

13. Wean & Sell Nov. 1 Risk Management Factors –Forward Contract What, When, Where, Price  Sale Barn  Video Auction

14. Background & Sell Jan. 1 Wean November 1 background 60 days Sell at ~670# on January 1 Increased risks –Price risk and opportunity –Rate of gain risk and fleshiness –Mortality and morbidity risk

15. Background & Sell Jan. 1 Risk Management Factors –Forward Contract –LRP Insurance Minimum coverage period is 13 weeks, so insurance must be purchased as appropriate

16. Background & Finish Previous backgrounded calves put in feedlot January 1 and fed until August 20 Increased Risks –Price risk –Opportunity cost –Mortality, morbidity –Weather –Feed price

17. Wean Sep. 1, Finish Lower cow costs More feed yardage costs Improved quality grade